Does a Smaller Business Need to Report Beneficial Ownership Information?
In compliance with the Corporate Transparency Act (CTA), small businesses in the United States are required to submit Beneficial Ownership Information (BOI) reports to the Financial Crimes Enforcement Network (FinCEN). These reports aim to enhance transparency and combat financial crimes by disclosing details about a company's beneficial owners.
Who Needs to File a BOI Report
Most private companies, including LLCs and corporations, are required to file a BOI report, except for publicly traded companies and heavily regulated entities like banks. The key individuals to be reported are those who own 25% or more of the company or who have substantial control over the business. Required information includes full legal name, date of birth, residential address, and government-issued ID number.
Deadlines for BOI Reporting
- Businesses formed or registered before January 1, 2024, had to file their initial BOI reports by January 1, 2025.
- Businesses formed or registered after January 1, 2024, must file their initial BOI reports within 90 days of effective registration or notice from the secretary of state.
- Businesses registering after March 26, 2025, must file initial BOI reports within 30 calendar days of notice of effective registration.
- Any changes in ownership or other reported details must be updated within 30 days of the change.
Penalties for Non-Compliance
Willful violations may incur civil penalties up to $500 per day and criminal penalties including imprisonment up to 2 years and fines up to $10,000.
Public Access to BOI Information
The information filed is not public but shared with authorized government agencies only.
Submitting a BOI Report
You can submit a BOI report through FinCEN's website, either as a PDF or using the online system, and there's no charge to file a report through FinCEN. You also have the option to work with a third-party service provider like LegalZoom or ZenBusiness to submit your report for a fee.
For businesses created or registered on or after Jan. 1, 2025, the BOI reporting deadline is 30 calendar days after receiving actual or public notice that creation/registration is effective.
In summary, if your small business was formed before 2024, you must have filed by January 1, 2025; if it was formed after, filing is due within 90 days of registration, moving to 30 days for registrations after March 26, 2025. Updates to reports are due within 30 days of any changes. These requirements aim to enhance transparency and combat financial crimes.
[1] Corporate Transparency Act (CTA) - [Link] [2] FinCEN's Beneficial Ownership Information (BOI) Frequently Asked Questions (FAQs) - [Link] [3] FinCEN's Notice 2023-01: Temporary Extension of Certain Beneficial Ownership Information Reporting Deadlines - [Link] [4] FinCEN's Notice 2023-02: Beneficial Ownership Information Reporting Deadlines for Certain Businesses Affected by Hurricanes Milton, Helene, Debby, Beryl, and Francine - [Link]
- To guarantee compliance with the Corporate Transparency Act (CTA), small businesses in the finance sector, such as small-business insurance providers or small-business credit companies, are required to submit Beneficial Ownership Information (BOI) reports to the Financial Crimes Enforcement Network (FinCEN).
- After analyzing the BOI reports, financial agencies can ascertain the creditworthiness of small businesses based on the details disclosed about their beneficial owners, potentially impacting tax obligations and future business transactions.
- If a business fails to submit a timely BOI report or updates, it may be subjected to civil penalties amounting to $500 per day, as well as criminal penalties including imprisonment for up to 2 years and fines up to $10,000.
- An app, such as the BOI reporting system offered by FinCEN, can be a helpful tool for small-business owners to ensure their finance, insurance, and credit-related businesses remain in compliance with BOI reporting requirements and stay on the right side of law enforcement agencies.
